Estate planning is about defining and living out your legacy during your lifetime. It enables you to enjoy the impact your plan has on the people and organizations you support. But there are a lot of myths that still need debunking:
You may be convinced that you need an estate plan, but you're fuzzy about what it covers and even how to make one. One great place to start is to determine your net worth. Add up rough estimates of the values of your assets, including bank and investment accounts, jewelry, collectibles, cars and boats, as well as retirement plans. Don't forget the death benefit from your life insurance. Add to that any business interests or money owed to you and, of course, real estate.
The physical and financial health challenges caused by the COVID-19 pandemic gave us time to rethink our priorities and expectations. Estate planning is one area that has received a lot of attention, and for good reason. Here are three basic areas to review as you reassess your estate plan:
Major life changes, whether good or bad, can be so overwhelming that we fail to realize just how deeply they affect our estate plan. For example, if you get divorced, you need to update not only your will but also your 401(k) beneficiary designation, since the latter trumps your will.
There are myths and misconceptions about estate planning. Here are the top common mistakes to avoid and help your family save thousands of dollars in unnecessary taxes and probate fees:
Many people find it hard to come to terms with their own mortality, which can make transitioning wealth from one generation to the next very difficult. But putting it off, and worse still, not dealing with it, can be one of the worst mistakes we can make.
An umbrella insurance policy is very helpful when you are sued and the dollar limit of your original policy has been exhausted. The added coverage provided by liability insurance is most useful to individuals who own a lot of assets or very expensive assets and are at significant risk of being sued.
What happens after your death? A last will and testament comes in handy to document the name of the person (executor) who carries out your wishes after you die. If you don't own a lot of property, a simple will is likely all you'll need.
Few things are more emotionally trying than going through a divorce. Once you arrive at a settlement agreement, you feel some relief that you can move on with your separate lives. But you may not realize that your hard-earned money can end up back with your former spouse if you fail to implement an estate plan that prevents that from happening.
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